Cherry Hill’s 15.4% Yield Looks Tempting, But a String of Dividend Cuts Tells a Cautionary Tale

Core Viewpoint - Cherry Hill Mortgage Investment Corporation (CHMI) is currently offering a high annualized dividend yield of 15.04% at a stock price of $2.66, but this yield is a result of a history of dividend cuts and financial instability [2][3][8] Financial Performance - The dividend has been reduced from $0.49 per share in 2017-2018 to the current $0.10 per quarter, with a significant cut of 33% occurring in September 2025 [3][8] - In Q3 2025, GAAP EPS was $0.05, which did not cover the $0.10 dividend, indicating financial strain [4][8] - Q4 2025 showed a slight improvement with diluted EPS of $0.14 covering the $0.10 payout, but earnings available for distribution were only $0.11 per share, leaving a narrow margin [4][8] Revenue and Market Conditions - Cherry Hill faced a 37.2% year-over-year revenue decline, with its mortgage servicing rights (MSR) portfolio shrinking from $17.0 billion to $15.9 billion [8] - The net interest spread for residential mortgage-backed securities (RMBS) decreased from 3.55% to 2.52%, indicating pressure on profitability [8] - Rising prepayment speeds could reach 15% if mortgage rates decline, further complicating the sustainability of dividends in a challenging 2026 rate environment [8]